tv Whatd You Miss Bloomberg April 6, 2016 4:00pm-5:01pm EDT
[closing bell ringing] closing hire,cks rising the most in almost a month. joe: the question is "what'd you miss?" scarlet: the s&p 500 remains stuck in a 15% range swinging between the highs and lows of that range. we have a technical outlook. cost u.s.has companies $18 billion between 2010 and 2015? we dig into the pricing of corporate bonds. alix: and we will go to amsterdam to discuss how it could influence the limning runs brexit vote. scarlet: a temp down and volatility may be making a comeback.
the nasdaq closing at its highest level the sheer. : pretty impressive -- we had the fed minutes that came out today. this idea that the fed is not in a rush to hike. markets kind of treaded lower. right before 3:00, which is when the st. louis fed president came out and that's when we saw a huge rush in stocks and a rally to the close. one of the biggest winners in the nasdaq were biotech stocks. breakout, rowling -- rallying the most since 2009. two dollars away from its 100 day moving average. with that risk rally, we saw yields pick up just a little
bit and an immediate spike in the short-term rates into year yield right after the fed and its came out. hire on the two-year and .3 hire on the 10 year. scarlet: the yen goes from strength to strength. the dollar trading at a $1.09 handle. sinking for a fourth straight day. terms of commodities, oil with an unbelievable move up . you have inventory numbers that came up and an inventory draw in the u.s. refiners starting to work overtime and utilization up. on the bearish side, you got a product build that was unexpected. watch that going forward. scarlet: now let's take a deep
dive into the bloomberg. alix: i'm looking at yen long. basically yenows long, noncommercial longs. right here is 50,000 contracts. we have only been above that level a few times. now, we have surged quite high above that level. capitulationshows by the bears. they threw in the towel and they ran. it doesn't necessarily mean we will he a reversion. but if we get some kind of , thee u.s. growth here dollar could get stronger. how it is remarkable
quickly people have come to this has that the bank of japan -- scarlet: people question to what extent the bank of japan will step in. furtherontinue to fall and i have an illustration of this correlation. when the line drops, it shows the dollar losing ground to the yen. worst majorthe performing benchmark indexes and this latest leg lower represent the next ended losing streak. this is an internal function. how the nikkei has declined for seven straight days. this was before shinzo abe took office. the nikkei is about 54% above
where it was, but this is serious. joe: both of those are remarkable charts. datat to look at one key point. about central banks are in easing mode and there's been this emerging market currency, but there are emerging fundamentals that have again to turn the corner. look at the composite bmi, looking at the services and manufacturing. back at a 10 month high, above 50. even though a lot of talk has been about central banks, there might be improving fundamentals that show the rally is based on something real. alix: don't you think it's funny
we have a fed minutes day and everyone is talking about e.m. japan. it is very telling. perhaps the market thinks it is old news. you can find all these charts and more on twitter. alix: we want to bring in our first guest from strategic research partners. congratulation on the wildcats winning the ncaa. let's go back to one of your notes. the s&p 500 spent the better part of the last year trading in this 15% range. we had to big selloffs and into recoveries. what do the technicals indicate about how the second quarter will shape up? guest: that is the range we are looking at going forward. that has beenngs
encouraging is the rally has been more inclusive. right a step in the direction as with a group on the playing field that hasn't been there. on the positive side of the leadershiptinued from industrials and from tech would be positive. everything is not working. near a 52 week high. names thatandful of have not given us the same message. this shows the percentage of stocks from their 52 week high and you see just as many stocks closing at 52 weeks high about 20% away from here. a third of the market is in very good hands and a third of the market is not.
both at the sector level and the market level. alix: dealing thing we have seen is that stocks and oil moving in lockstep with the s&p and now there's this diversions continuing for the high yield going further. joe: there are certainly some diversions that have shown up over the last two weeks. we should be mindful of oil being one thing, but oil did rally sharply this afternoon. but it did peak on march 22 and you look at high-yield credit, high-yield credit the on march the second. catchhe yen continuing to a bid here, there are macro issues that have not then totally resolved just yet. one of the areas that is really popular are these stocks looking like don's.
itsive multiples, stocks on hair, how long is this going to last? alix: they are outperforming. guest: that is what has been so interesting with this move off the february lows. unusual when you look at how markets respond coming off major lows. yields as the 10 year i want to ownnge, names like coke and pepsi. i would be reluctant walking it back. scarlet: we have not mentioned financials yet and you have an looking at them. banks look at european relative to the overall stock market, the have plunged to new
lows. why isn't this causing more of a drag? banks i put the european up there as something we need to be mindful of going forward. back to multiyear lows, you could have gotten the china called that right 15 years ago and had made no money on the biggest bank in hong kong. that tells us a lot about how these are being treated and something that just doesn't look right. last time you were on, you called for the yield to hit 10%. what is your call for the 10 year? guest: it is unchanged. german yields are already at new lows. swedish yields broke down yesterday. it's a very singular message coming from the global bond market. lowre 14% higher off the
and yields are 15 basis points higher. we have not seen the resounding message off the bottom that you would expect. that's something we need to pay a little respect to. it is a tough call and inflation expectations are something we should be mindful of. interesting that as oil has been rallying, 10 year yields have not been involved. the trend out of global yields is lower. joe: one interesting aspect of this rally is that it is accompanied by ongoing shorts. now isnterest right massive and it continues to rise. what do you make of this? most sentiment is noise. it's very rare you get a package of sentiment data in one of the two extremes. this is one input, but so are
put calls, and those are not attending the same message. i would be reluctant to have a big call based solely on sentiment. if there is one thing we should not spend to much time on, it is making a market called based on the sentiment environment. scarlet: chris marone, head of technical analysis at strategic. alix: a divided fed. we will sit down with a bond veteran in just a few minutes. ♪
blankenship was sentenced to year in prison for his role in the deadliest u.s. mine disaster in four decades. massey energy of when one of the company's mines exploded in 2010. 29 people anded he was convicted of conspiracy to violate mine safety standards. year'sstandards for this boston marathon -- authority 5000there will be up to law enforcement officers, enhanced checkpoint and dozens of surveillance cameras along the route. security has increased since the terror attack in teen. a japanese military jet carrying six airmen has disappeared over southern japan. it was reported missing about one hour after it took off for what was supposed to be a three-hour flight.
was inspecting facilities in the region and the search has been suspended for the night. two republican lawmakers opposed to the iran nuclear deal are trying to block a proposal that would ease rules on dollar transactions to support legitimate trade business with iran. marco rubio and mark kirk are introducing legislation that would are the treasury permittingfrom foreign banks to conduct foreign currency trades in u.s. dollars. back to you. scarlet: we have breaking news -- bed bath & beyond reporting earnings and in terms of earnings per share, adjusted slightly higher than analysts were looking for. side, look at the revenue $3.42 million is a little above the consensus. we really want to look at the
comparable sales, an increase of 1.7%. we have a headline that indicates that bath and beyond will be paying a dividend and now shares have shot up explain 5%. the stock was lower but following this latest headline of this quarterly dividend, the stock is getting a boost. "what'd you miss?" said -- policy makers divided over the timing of the next rate increase. several have expressed the view that are raising rates could be prudent or raising it as soon as a role would signal a sense of urgency they did not think appropriate. if you look at the odds, it gets around the last march meeting. joe: despite the fact that the
unemployment rate is at target and despite the fact it seems inflation is picking up, expect haitians four rate hikes have fallen of and it sounds like the fed has pushed back its timing for the next hike. where do you see the fed relative to the economy? do you think that is appropriate? guest: the way i see the fed is that they are cut -- caught between a rock and a hard place. they are trapped by their own mandate, strictly a domestic mandate. are primarily more global and more demanding. it used to be there big concerns were interest rates and all the money comes from southeast asia.
all the money has come from southeast asia, but we're still caught up with what is happening in the world. we have far and away the highest interest rates. at the margin, that holds more money. domestically, that gives us a problem in that we are competing globally. we compete with companies around the globe where price is important. korea have ath real advantage because their costs primarily our local and our costs primarily our local and in both cases, they are labor costs. national -- at a natural disadvantage. just talked to caterpillar or one of those votes.
the other part is trickier. disruption in of the world. yet tragedy in the middle east, concerns around eastern europe and for lack of a better word, lack of concern in the south china sea area. that tends to force money out. but that money is coming to the u.s. in terms of into treasuries. it sort of negates what the fed does. the long and is going to stay flat because we have a safe haven. is that a good thing? see inthey would like to , it would bed helpful to the u.s. economy if short rates were up somewhat so
that the smaller banks, particularly the savings banks and local banks could attract savings deposits and have that money there to lend to local area businesses. have beenadvisors saying for two and a half or three years that this is the problem. not a problem for the little bank -- for the big banks, but it's a big problem for the little banks. it would be good to have money more freely available to small local business organizations. that would be a very good thing. iey went up one time and what is causing the money to come from some of these areas. some of them don't have any money left. alix: we're going to take a
unbelievables, and decline. look at that chart and you see a lot of money going to the high-yield market. you like high-yield and are willing to take on some of that risk. dan: yes, i am. high.pecific risk is things can change and when the -- has lessleft access to capital markets or is more extended in their debt, they get hit harder. thing you can do in the high-yield market is when it is out of favor with the fund flows are out, which these days comes and goes, much more than it used andyou can do your homework improve the odds. you are still going to get a bloody nose or two. bonds -- youuying
are buying them at 76 or 82 and there's a huge difference. we talked about how stocks are stuck in this range. do you see them as being stuck in a range as well? of similarity lot between stocks and 2014 and high yields from july of 2014. together andbottom they did in january and february, just write together. withad an underlying thing the price of oil. high-yield, unlike stocks or at least unlike big stocks has
risks new tofic that company. is an important difference. where do you see us overall in the credit cycle? where are we? dan: we are in a scattering. if you are talking about the hospital companies, they are in the third or fourth inning. are in the extractive you are in mining, the ninth inning. for: the ninth inning
mark: i'm mark crumpton. with get to first word news. hundred of members of flint michigan have filed a racketeering lawsuit stemming from the lead contamination of the cities drinking water. suits thatf the many came from the decision to switch the water source. the obama administration is transferring money largely successful fight against ebola to battle the threat of the zika virus. most would be devoted to the center for disease control and invention -- and prevention. the cdc is focused on vaccines and combating the mosquitoes that spread it.
the japanese prime minister could head to russia in may for a long-awaited meeting with vladimir putin. russia and japan pledged to continue talks over a dispute of four islands that dates back to world war ii. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. let's get a recap of today's market action. the s&p 500 having its first .ack-to-back above 1% move we've seen the trade of small moves and then an instance of 1% moves to the back for the first time. it is the first gain for the major indexes as well and we close that session highs. seemed to bety dead and is picking up a little bit. beforef the gains from
then, overall a quiet rally. stocks trended a little lower and then moved from 3 p.m. into the close. was the killer in the nasdaq. that helped to pull the nasdaq higher. scarlet: moving higher in the after-hours market is bad pass and beyond. perhaps the best news for shareholders is the fact that the company is going to begin an initial quarterly event of 12.5 cents. u.s. companies might have overspent by $18 billion. here's how -- higher borrowing costs. a borrowing firm found corporate bonds rally half a percent tween the day the bonds are price and it a they are sold. have into prices may
low and yields to. companies paid more tomorrow. joining us is the founder of a consulting firm and tracy alloway of bloomberg news. you wrote this story. tell us about what was uncovered here. if you think of a bull market we've seen in finance, you have to think about corporate bonds. a crazy bull run over the past eight years. an explosion of new issuance at a time when our link cost is really low. a because there has been giant scramble for new bonds, borrowing costs should be relatively low. as soon as they sell it into the market, you get a pop in the price and i would add certain clients are benefiting from that. joe: does this sound like a
structural flaw in the bond market? gap between this what companies are borrowing at in what happens, what does that tell you about the structure of the market? like shiny new things, so there's a lot of .emand and that carries over maybe some people who did not get access to the primary market are eager to buy the bonds were by this docs. the major difference between the treasury market and corporate on market is the process of issuing securities is very different. treasury market it's a nondiscretionary process in which price determination in terms of how bonds should we by an is determined actual auction. but when we are talking about the corporate bond market, that's determined by look and
feel. so great at's not process for determining where the bonds should be priced. where there is a smoking gun here is it seems to be happening more for debt that does not belong to the banks then debt that actually does. let me play doubles advocate. like our some people colleague who are users natural friction and it's natural for people to pay for immediacy. what do you say to that? i agree. i think something about this research that is misleading is that the problem is there isn't an appreciation the bond value. the problem is when you have a discretionary process, some people benefit from it and others don't get to participate. majors what is causing
issues in the market. about apiece, you talk result of this allocation fewess, which is very people are getting most of the new issue deals and therefore, there's a concentration issue going on with the marketplace. this is a better explanation than the balance sheet. and this chart goes to talk about it. most of the volume is concentrated in just a few hands. one access is coming from 36 clients. tracy: don't forget they are in the hands of the big asset managers. issue is there are some big investors who can get free money and other investors like you and me, i don't get access to that.
it reminds me of what we have been talking about with ipo's years. tracy: was a massive shakeup of the ipo market. there were signs for banks allocating things to their favorite clients. jump inhad a massive the size of the corporate bond market, something like $8 trillion. it has expanded enormously since 2009. there is one person devoting half his time at the sec to this market the last time i checked which was about one year ago. markets of the hottest in the world and we have one guy devoting half his time to it. scarlet: what kind of step of scrutiny do you expect from regulators? there has been some work
on this about the biggest ,orporate on deal of the day where you have an investor quoted in that article saying we got shut out of a $49 billion deal. we were told we needed to do more business with the deal to get more allocation. if that doesn't get them to come to the new allocation market, i don't know what will. at the end of the day, someone has to be injured by this process and those who are being shut out need to rally their voices. alix: thank you very much. scarlet: we have breaking news on mcdonald's saint andrew mckenna will retire as chairman of the board. the nine -- the nonexecutive chairman has been nonexecutive chairman since 2004 and will step down on may 26. mcdonald's will name a new
: the league -- the concern we have as leaders of some rations looking to take the best of america without making a contribution to the success of our country and that is wrong. came aftere remarks saunders said it was un-american to change rules after the companies had changed their structure. alix: another person has died due to their injuries from an exploding airbag. a driver's airbag inflator ruptured in the back of a 2002 civic. it is the 10th known u.s. death an attempt known worldwide. noticesiled multiple but repairs were never made. scarlet: shares in bed bath & beyond climbing. four cents higher than what analysts had been looking for full top they declared an initial dividend of 12.5 cents
per share. that is your bloomberg business flash. the fed minutes released today indicated a spirited debate over and april increase but any sparring was downplayed by st. louis fed president james alert. he said all fomc members are passionate about their position. what you see right now is the odds of a rate hike in april have come down to nothing and for june, about 18%. in the beginning of the year, we were at 50% odds of a rate hike in march. in just a few months, how drastically the market has re-rated what the fed would do. joe: at the beginning of the year, there were expectations of multiple hikes and then it picked up again and dropped again. you can only look to the markets so much. the fed has come down in
some ways to meet the markets. we will have to look at what the pboc does next. james alert was asked if the march jobs report would make the case for an april increase. i thought was a good rapport but it's consistent with a long string of any good reports. even blips one way or another may be relatively minor. you could see steady improvement in the labor market. the issue is probably growth more than labor markets and growth has been somewhat tepid. trackingack king -- forecast are down. how much of it is residual seasonality would be a good topic for the meeting. grexit had been well over 2% about a month ago.
the first quarter seems to be weaker and if you do a seasonality analysis, you will get extra seasonality, so what the heck is going on? if you want to .5% growth, you don't want to see it under 1%. does this mean all things considered, this meeting is not one where there would be a debate over the april increase as much as the june increase? >> we will see how people come into the meeting and assess the data. it is fair there hasn't been all that much data since the meeting and it has been mixed in various ways. conclusionw your own but i don't want to be in the business of trying to predict what they may or may not do.
>> it seems to me you are someone who would have then ready to make the case for april. shiftedous if something goes slowly strategy -- thatllen describes this is something that slows you down? >> the committee has had a go .low strategy before the hike in december, we said repeatedly it would be gradual and data dependent. follow througho on that in an appropriate way. hairsplitting. that's important to financial markets we have been very consistent in saying we want to go slow and be data dependent. that is one reason i don't want
to try to predict exactly when the committee will go. you want to wait for data to accumulate and let the meeting unfold as appropriate. >> what are you watching? is it inflation expectations? >> i have been concerned about inflation expectations and we had the five-year forward to space down below 1.5%. that got me nervous and i started to flag those. back toe recovered december levels and i find that comforting, but we would like to see those numbers higher than they are today. reflect the credibility of the fed and its ability in the long run to hit it inflation target of 2%. >> but you are still watching
deal with ukraine. referenda in vote demonstrated some dissent with one of the bloc's founding members. today athat happened the polls in the netherlands. quite quiet during the day but it seems there was a theout of 32% which means referendum is valid. and it was a clear majority for a no vote. which means the dutch able were in a majority opposing the deal between the eu and the ukraine. joe: i think viewers are wondering why they are talking about how the dutch feel about ukraine. what's the real significance of this vote? guest: the people in the netherlands say they don't want
and expansion of the european union and have the feeling too much desire outside the netherlands in brussels where people gave a clear signal don't want toy give more power to europe. scarlet: the dutch government has said it will respect the vote. what would that mean for the government or what would it mean for other governments who have signed off on this eu pact? minister justme said it is clear that it is a no vote and would lead to the threshold of 30%, then they would have to take it serious which means they cannot ratify the treaty as it is now. what does it mean for the
government and the netherlands? what does it say going forward? it was a blow for the prime minister and the government who were in favor and having a yes campaign, promoting a yes vote. against this,were so given the fact we will have factions in a year and the both parties are doing quite -- hown the polls, they to deal with this outcome can be decisive for their future. alix: the other part has to do with the u.k. what would this mean going forward for june. both of them are commentary for how that country feels about the eu.
guest: you could say it is the rexit opinion poll of a b referendum. this is a clear majority saying no. scarlet: what i find interesting is that this has generated so much discussion. jean-claude juncker said a vote against the treaty could cause a large continental crisis. the german foreign minister called it a bit absurd, even while he recognized big doubts about the state of european politics and immunity. joe: tell us why -- how the dutch system works. why was this put to a vote anyway? since last year, we have which givesndum law
people the opportunity to collect sufficient votes to be able to call for a referendum. this was the first law which passed and was dealing with the which isere's a group against european participation and they started to collect a large number of votes and a large number of people who wanted this referendum. that was a couple of months ago. has to start the process of holding a referendum and that is how we got here. we will look for more rhetoric tomorrow. thank you for joining us on the dutch vote. scarlet: coming up, what you need to know to gear up for tomorrow's trading day.
scarlet: i'm scarlet fu "what'd you miss?" alix: be on the lookout for china foreign reserves. they will be released sometime tonight or tomorrow and you know the market will be paying attention to what the ecb as he has had to do. joe: people were talking about this could be good news or could be one to watch. the other thing to watch our initial jobless claims, the great high-frequency indicator. my desert island indicator. scarlet: and the u.s. federal will bebank chairman discussing the state of the , alany with an bernanke
mark: i'm mark halperin. john: and i'm john heilemann. "with all due respect" to donald that, we bet you wish national teflon day, which is today, would have arrived a little bit earlier. ♪ john: 3 new yorkers, a texan, and buckeye walk into a primary. we will see how that joke ends. after the front-runners defeated by double digits in the badger state, all the candidates turning their sites to this